Health Checkup

By Kellie Lunney

December 1, 2012

The cost of health care is an important issue for most Americans and a politically hot topic with the continued implementation of the 2010 Affordable Care Act. The Federal Employees Health Benefits Program is widely considered a model health insurance program, but that doesn’t mean it’s immune to change or criticism.

In fact, while many FEHBP enrollees report being pleased with their coverage, according to an informal Government Executive poll this fall, reactions from feds and retirees have been mixed when it comes to premiums, co-payments, coverage options and subsidizing health care costs for the entire recipient pool. In the final days of open season, during which enrollees can switch insurance plans, it seemed those concerns could prompt some people to change.

The Office of Personnel Management in September announced that premiums will increase an average of 3.4 percent in 2013; changes in the enrollee share of premiums vary by plan, so some people pay less and others shell out more. For those 65 and older, there’s also the question of how FEHBP and Medicare work together and what the most cost-effective options are under those plans. Some feds have complained that the increase in premium rates, co-payments and prescription drug expenses they’ve experienced during the past few years is much more than the reported average and adds insult to injury on top of the ongoing pay freeze.

“It’s often the case that the more frugal plan does not have significantly inferior benefits,” says Walton Francis, author of Consumers’ Checkbook Guide to Health Plans for Federal Employees. The more expensive plan isn’t always the best bang for the buck. One reason people stick with a pricier plan is the ability to go out of network for providers, he says.

Several readers complained about having to subsidize FEHBP costs related
to coverage they don’t need. A long-standing complaint from enrollees, for example, is the lack of a self-plus-one option. FEHBP offers self-only and family coverage; enrollees with spouses
and no dependents must choose the family plan to receive coverage for their spouse. “I truly resent having to subsidize others by paying the same premium as those with many dependents,” said a GovExec.com reader using the handle NoHonorInCongress. A provision in the health care reform law that allows FEHBP coverage for dependents up to age 26 also isn’t helping people who don’t benefit feel any less resentful.

While some have balked at having to pay more for the family plan when they don’t have children, Francis notes a self-plus-one option would not be cheaper. “If they got their wish, they would pay higher premiums,” he says, because that demographic consists largely of older people without dependents who are more expensive to insure than a young couple with children. “OPM actuaries have confirmed that over and over,” Francis adds.

“It’s nothing short of a miracle that the FEHBP holds its costs down the way it does,” says David Ermer, a managing partner at Washington-based Ermer Law Group who represents the Association of Federal Health Organizations, a trade association of FEHBP plans. “The average age of an enrollee is 60. It’s an old group,” he says. And information gleaned from the Government Executive poll bears out that trend: Forty-eight percent of respondents were 47 to 59 years old, while 37 percent were 60 or older.

Some older FEHBP enrollees worry about how best to leverage FEHBP and Medicare. “If you’re a retired federal employee and enroll in [Medicare] Part B
after turning 65, Medicare becomes the
primary payer for many outpatient ex-penses your Federal Employees Health Benefits Program plan covers,” says Tammy Flanagan, senior benefits director
for the National Institute of Transition Planning Inc. and Retirement Planning columnist for GovExec.com. “This will save your plan a lot of money. As a result, your plan may offer you incentives to enroll in Part B. In many cases, your out-of-pocket health care costs will be limited to the FEHBP premium and the Medicare premium. Many FEHBP plans will waive their deductibles, co-payments and co-insurance when Medicare becomes the primary payer.”

Various factors typically affect health care costs, including an aging population, benefit changes and enrollees switching plans—and FEHBP is a diverse group. OPM assesses annual increases in part by using a framework that assumes no one will change plans, though the agency knows there will be movement. And that will certainly affect the cost of coverage in 2014.